Canadian Mining in Africa

“Do As You Please” Approach Comes at High Cost

While Canadian miners have expanded to all continents, Africa now accounts for about 17 percent of Canadian mining assets abroad, up from 11 percent in 2001. Next to South African investments, companies registered on Canadian stock exchanges now represent the most important source of investment in mining in Africa. From a total amount of C$
2.87 billion in 2001 and $6.0 billion in 2005, Canadian mining investment in Africa exceeded $23.6 billion in 2010. The trend illustrating the growing presence of Canadian companies in Africa is given in Graph 1 and the 2010 distribution of assets by countries in Graph 2. The country distribution of that investment and the minerals concerned as of December 2008 are in the pictures above.

The map shows that 91% of Canadian investments are concentrated in eight countries, with the order of countries’ importance being the following: South Africa (25.6%), DR Congo (17.8%), Madagascar (13.8%), Zambia (9.9%), Tanzania (9.5%), Ghana (6.5%), Burkina Faso (4.7%) and Mauritania (3%).

Issues of violence, environmental damage and human rights abuses abound in mineral rich Africa and according to a 2009 report produced by the Canadian Centre for the Study of Resource Conflict, Canadian mining companies have been the most significant group involved in such violations.

Liberalized mining regimes

Situations obviously vary enormously from country to country, sector to sector, and from site to site, but if I had to summarise current trends in mineral rich but highly indebted countries of Africa, one feature stands out above all others and it concerns the consequences of the way foreign investment in mining was encouraged by the liberalizing and opening up of the sector as of the 1980s and 1990s under the auspices of the multilateral financial institutions. This was done through the introduction of different generations of
mining regimes which aimed to provide generous incentives to attract foreign investment, as illustrated by the experience of Ghana in the 1980, Guinea in the mid 1990s, of Mali, Madagascar and Tanzania at the end of the 1990s, a pattern which continued into the current decade.

Liberalization involved the stringent retreat of governments from the sector, as well as their reduced sovereignty and authority. This process resulted in the weakening of government capacity necessary to negotiate contracts and regimes, to monitor impacts and if necessary, to bring in remedial measures. Reforms have in fact had the effect of
driving down norms and standards in areas of critical importance for social and economic development, as well as the protection of the environment. And, they created unprecedented profitable opportunities that foreign mining companies, including Canadian-owned ones, were eager to take advantage of.

For instance, in certain West African mineral rich countries there are no national norms in key areas such as water quality, dust particles, presence of cyanide. National standards are however crucially important instruments for ensuring the accountability of companies and public responsibility to monitor their enforcement. Such situations are therefore at risk of degenerating into conflicts between companies and communities which are then treated as problems of “security” by companies. The promises of socio-economic development and poverty reduction which were supposed to materialize with investment in mining have for the most part failed to become reality. Rather, the legacy has most often been negative environmental impacts; enclaved mining activities with very little if any linkages to the local economy which would permit the use of local materials, developing local skill, and contributing to a transformative development process; disappointing creation of employment; and lack of capacity to cap export revenues.

Here are a few examples:

In Ghana the restructuring of the mining sector between 1992 and 2000 entailed a reduction of the Ghanaian mining work force by 12 percent from 16,537 to 14,191 but an increase in the number of expatriates employed from 238 to 241.

In Madagascar, regulations concerning the protection of the environment exist on paper but as a 1998 World Bank study on that mining sector noted: “After several years of budgetary reductions, Government institutions lack the human and financial resources to enforce the law, especially in the context of decentralization.”

In Burkina Faso, the 2003 mining code failed to take account of the need for environmental impact assessments during the exploration phase; neither did it include provision for priority to the hiring of local labour given equal qualifications – clauses which already existed in the former 1999 Malian legislation.

Again in Burkina Faso, government inspectors of environmental protection do not have their own vehicles to visit sites and have been dependant on the companies for transport. In Mali, it is the private South African company responsible for the three major mining sites at the beginning of the decade which financed the evaluation of the health
impacts of possible water contamination resulting from cyanide spills related to its own activities.

Bonte Gold Mines Limited (BGM) : Ghana

As noted, a study by the Canadian Centre for the Study of Resource Conflict documents, Canadian companies have been implicated in many instances of environmental damage and flagrant disregard of national laws and regulations. The behaviour of the Canadian gold producer in Ghana Bonte Gold Mines Limited (BGM) in 2004 is a sad illustration. In March 2004, Bonte, which held a thirty year mining lease and was operating in Bonteso in the Ashanti region of Ghana, and which is a subsidiary of Akrokeri-Ashanti Gold Mines Inc., a Canadian-owned mining company listed at the time on the Toronto Stock Exchange, liquidated its assets and left the country without respecting many of its obligations. As a result, two Ghanaian organizations, the Environmental Protection Agency (EPA), the Minerals Commission, were forced to seek a declaration for an order of mandatory injunction on Bonte, compelling the company to take all steps necessary for the rehabilitation of the environment and repair damages. These included failing to follow the due processes for mine decommissioning; failure to give notice to its workers; failure to pay to date wages to workers and compensation to farmers
whose land has been acquired about fifteen years before for mining; as well as leaving a debt of about US$18million owed to various state institutions and private companies.

Anvil Mining Ltd: the Democratic Republic of the Congo

In October 2004, according to eyewitness accounts gathered by human rights lawyers, the Congolese Armed Forces (FARDC) ruthlessly suppressed a small scale uprising in the remote fishing town of Kilwa by a hitherto unknown group calling itself the Mouvement Revolutionnaire pour la libération du Katanga (Revolutionary
Movement for the Liberation of Katanga,MRLK). Although the rebels put up no resistance when soldiers from the 62nd Brigade of the 6th Military Region arrived to recapture the town, between 70 and 100 unarmed civilians were killed, including many women and children. The soldiers are said to have been on an indiscriminate rampage carrying out
arbitrary arrests and summary killings of suspected rebels and their supporters and subjecting those in detention to torture and beatings.

Anvil Mining Limited is a Canadian company incorporated in the Northwest Territories in January 2004 and listed on the Toronto Stock Exchange as of June 2004 (TSX:AVM). First Quantum Minerals, a Canadian company also listed on the Toronto Stock Exchange (TSX:FM), was, at the time of the event, the largest shareholder in Anvil Mining with an 18.6 percent stake until March 2005, and its representative was Chair of Anvil’s board of directors. The company operated the
Dikulushi Mine near Kilwa and has acknowledged that it provided logistical support to the Government troops upon their request. The town is difficult to get to by road so Anvil planes were used to fly in soldiers from the provincial capital of Lubumbashi. Interviews with survivors confirmed that Anvil had also provided ground transportation to assist in the military assault on the town; the vehicles were also used to transport people who had been arbitrarily detained and to help remove corpses after the devastating military operation.

Anvil denied knowing what was planned concerning the military operation or being involved in it in any way. However, this violent incident illustrates eloquently that companies that operate in conflict zones have a responsibility to ensure that their operations or, those that they support, do not result directly or indirectly in human rights violations.

A UN report published in August 2010 cited the Anvil case as a prime example of how justice is often not done in the Congo. On November 9, 2010 an association representing Congolese citizens who were relatives of victims and survivors filed a class action a Montreal court against Canadian company Anvil Mining Limited.

Canada’s “do as you please” approach

There is nothing inevitable about the present situation. It depends on the lack of political will and leadership of those who govern us, as well as a lack of foresight to recognise the consequences of not insisting that Canadian companies respect the international obligations to which our country has said it would conform.

While other countries such as Sweden or Norway show that holding mining companies accountable is perfectly feasible, as demonstrated by the fact that they have introduced procedures to monitor and to investigate complaints and if necessary to bring in remedial action and that they actually apply these.

Canada prides itself of being the most important source of mining investment in Africa (outside South Africa) but omits to say that this growing presence appears to depend on giving a license to companies to “do as you please” with regard to respecting international norms whether concerning labour standards, the environment or human rights because Canada continues to refuse to adopt measure to ensure that Canadian companies be held accountable.

With regard to mineral rich countries of Africa, the heritage of severely weakened institutional capacity and the blurring of lines of responsibility and accountability are clearly fertile ground for violations to occur. The increasing attention to issues of security and conflict management echoes this trend. However, as becomes clear from the results of the vote on Bill C-300, our governments have failed to recognise the importance of taking a more serious approach to accountability. The fact that Canadian companies are more likely to be involved than those from other countries should give particular reason to pose.

If Canadians knew the price in terms of violations of the rights of communities and individuals affected by Canadian companies, would they be willing to say that these justify the short-term gains of those companies implicated and of their share holders?

In the meanwhile however, present trends confirm that the risk of conflicts and violence in which Canadian companies operating in mineral rich countries of Africa are implicated is growing. It is future generations of Canadians who will have the task of dealing with our increasingly tarnished reputation left by a legacy of violations in this sector.

Bonnie Campbell is a professor of political economy at the Department of Political Science at the University of Québec in Montreal where she heads the Research Chair C.-A. Poissant on Governance and Aid for Development.

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